GLOBAL MARKET SENTIMENT SURVEY December 2012

Transcription

1 GLOBAL MARKET SENTIMENT SURVEY 2013 December 2012

2 TABLE OF CONTENTS EXECUTIVE SUMMARY FULL RESULTS INVESTMENT PROFESSIONALS INCREASINGLY OPTIMISTIC ON GLOBAL ECONOMIC GROWTH THE FUTURE LOOKS BRIGHTER FOR LOCAL ECONOMIC GROWTH, UNLESS YOU RE IN EUROPE TO RESTORE INTEGRITY TO THE GLOBAL CAPITAL MARKETS, CHANGE MUST COME FROM WITHIN ADDITIONAL FINDINGS ABOUT THE STUDY SURVEY QUESTIONNAIRE

3 EXECUTIVE SUMMARY CFA Institute s annual global market sentiment survey reveals members cautious optimism about the future of the financial markets in 2013, tempered by their concern that the underlying problems that contributed to the worldwide economic crisis and the decline in the integrity of the markets have not yet been solved. As experienced participants within the global financial services industry, the opinions expressed in this report are a strong reflection of the views of highly educated, ethical practitioners with unique insights into the opportunities and risks of the financial markets. 3

4 EXECUTIVE SUMMARY When asked whether they believe the global economy will expand, contract, or stay roughly the same over the coming year, of members answered that the economy will expand; believe the global economy will contract. The outlook is still guarded, which is understandable given the ongoing European sovereign debt crisis, an expected slowing of economic growth in China, and the pending fiscal cliff in the United States. But the outlook is clearly more optimistic than last year, when only 34% said the global economy would expand and nearly as many (2) said the global economy would contract. Members outlook on other short-term issues, such as employment opportunities for financial professionals, has also improved slightly over the past year. Further, 50% of those surveyed expect equities to outperform all asset classes, while only about 41% thought that a year ago. 4

5 EXECUTIVE SUMMARY Despite the cautious optimism regarding short-term issues, longer-term issues the ones that helped bring about the financial crisis whose effects are still being felt must be addressed for continued positive progress for improvements in economic health and market integrity. In particular, 56% of members identified a continuing lack of ethical culture within financial firms as the major factor contributing to the current lack of trust in the finance industry, and two-thirds said that a culture of ethics and integrity within firms needs to be reestablished. The primary problems are not the physical failures of the market or government actions but the culture of firms within the financial industry. 5

16 THE FUTURE LOOKS BRIGHTER FOR LOCAL ECONOMIC GROWTH, UNLESS YOU RE IN EUROPE Biggest concerns for local markets include weak economic conditions in advanced economies, political instability in developing economies, and the European sovereign debt crisis in Europe

22 TO RESTORE INTEGRITY TO THE GLOBAL CAPITAL MARKETS, CHANGE MUST COME FROM WITHIN Investment professionals are cautiously optimistic about the global economy in 2013, but ethical culture within financial firms needs to be addressed to solve systemic problems that led to fiscal crisis

27 DO YOU THINK THE INTEGRITY OF GLOBAL CAPITAL MARKETS IN (UPCOMING YEAR*) WILL BE BETTER OR WORSE THAN IN (CURRENT YEAR**)? % 55% 56% 32% 26% 7% Better About the same Worse *Upcoming year displayed the future year (e.g. 2013) **Current year displayed the present year (e.g. 2012) 27

28 WHICH FACTOR DO YOU THINK HAS CONTRIBUTED THE MOST TO THE CURRENT LACK OF TRUST IN THE FINANCE INDUSTRY? Global AMER APAC EMEA Advanced Developing 5 56% 53% 63% 55% 62% 10% 2% 2% 2% 1% 2% 1% 10% 4% 4% Lack of ethical culture within financial firms Poor government regulation and enforcement Market disruptions (failed IPOs, flash crash etc.) I don t think there is lack of Other trust in the finance industry. No opinion option excluded from results. 28

32 WHICH ONE OF THE FOLLOWING REGULATORY OR INDUSTRY ACTIONS IS MOST NEEDED IN THE COMING YEAR (2013) TO HELP IMPROVE INVESTOR TRUST AND MARKET INTEGRITY? % 3% 4% Improved enforcement of existing laws and regulations Improved corporate governance practices Improved regulation and oversight of global systemic risk Improved market trading rules on transparency and frequency of trades Improved transparency of financial reporting and other corporate disclosures Improved auditing practice and standards 32

37 PLEASE RANK THE FOLLOWING ETHICAL ISSUES FACING YOUR LOCAL MARKET IN THE COMING YEAR IN ORDER OF THE MOST SERIOUS TO THE LEAST SERIOUS* 26% % 10% Mis-selling by financial advisers Market fraud Integrity of financial reporting Market trading practices Disclosure/use of financial derivatives *Chart displaying proportion of members ranking the ethical issue as the most serious facing their local market. Investment management services/structure 37

40 PLEASE RANK THE FOLLOWING ETHICAL ISSUES FACING GLOBAL MARKETS IN THE COMING YEAR IN ORDER OF THE MOST SERIOUS TO THE LEAST SERIOUS* Disclosure/use of financial derivatives Integrity of financial reporting Market fraud Market trading practices Mis-selling by financial advisers *Chart displaying proportion of members ranking the ethical issue as the most serious facing global markets. Investment management services/structure 40

44 RANK THE FOLLOWING ASSET CLASSES IN ORDER OF EXPECTED TOTAL RETURN IN THE GLOBAL MARKETS IN 2013* % 41% 25% 10% 4% Equities Precious metals Commodities Bonds Cash *Chart displaying proportion of members ranking the asset class as likely to have the highest expected return. 44

51 IN 2013, DO YOU EXPECT EMPLOYMENT OPPORTUNITIES FOR INVESTMENT PROFESSIONALS IN YOUR LOCAL MARKET TO INCREASE, DECREASE, OR STAY ABOUT THE SAME? % 4 35% Increase Decrease Stay about the same "Not Sure option excluded. 51

52 ABOUT THE STUDY 52

53 ABOUT THIS SURVEY The CFA Institute Global Market Sentiment Survey was created to seek input from CFA Institute members and gather feedback on market sentiment, performance, and market integrity issues in 2013, and to further our mission of promoting ethical and trustworthy investment markets. METHODOLOGY An online survey was conducted from 30 October to 13 November All CFA Institute members globally (over 115,000) were invited to participate in the survey; 6,783 responded, for an overall response rate of 6% and a margin of error of ±1.2%. In addition to analysis and reporting at the global, regional, and advanced vs. developing economies level, 22 countries are also included in this report. 53

54 DEFINITIONS ADVANCED ECONOMIES: Countries classified as advanced in this report are based on the Human Development Index (HDI), a tool developed by the United Nations to measure and rank countries levels of social and economic development. DEVELOPING ECONOMIES: Countries classified as developing in this report are based on a classification system that considers per capita income level, export diversification and degree of integration into the global financial system. 54

57 ABOUT CFA INSTITUTE CFA Institute is the global association of investment professionals that sets the standard for professional excellence and credentials. The organization is a champion for ethical behavior in investment markets and a respected source of knowledge in the global financial community. The end goal: to create an environment where investors interests come first, markets function at their best, and economies grow. CFA Institute has more than 110,000 members in 138 countries and territories, including over 103,000 CFA charterholders, and 138 member societies. For more information, visit QUESTIONS? Media inquiries: J.D. McCartney Director, Public Relations, The Americas LEARN MORE ABOUT THIS STUDY ON OUR WEBSITE AT: ges/global_market_sentiment_survey_2013.aspx Survey inquiries: Melissa Looney Director, Market Intelligence 57

58 SURVEY QUESTIONNAIRE 58

59 Global Market Sentiment Survey 2013 Global & Local Economy and Capital Markets In 2013, do you expect your local economy to: Expand Contract Stay roughly the same Not sure In 2013, do you expect the global economy to: Expand Contract Stay roughly the same Not sure Rank the following asset classes in order of expected total return in the global markets in 2013, where 1 indicates the highest expected return and 5 indicates the lowest expected return, by clicking and dragging the asset class to your preferred rank. Cash Equities Bonds Commodities Precious metals

60 Which of the following investment vehicles do you think you will use the most in 2013? ETFs Index funds Structured products Hedge funds Private equity funds Individual stocks and bonds Mutual funds Other (please specify): None/not applicable Which three equity markets do you think will provide the best investment opportunity in 2013? Please rank your top three choices, from the best opportunity (1) to the third best opportunity (3). Note: The drop-down list displays the 30 countries in terms of global stock market capitalization. If you think a country not listed provides a better investment opportunity in the coming year, please choose other. 1 (Best opportunity) 2 3 (Third best opportunity) Argentina Australia Brazil Canada Chile China Egypt France Germany Hong Kong India Israel Italy Japan Kuwait Mexico Netherlands Qatar Russia Saudi Arabia Singapore South Africa South Korea Spain

61 Sweden Switzerland Taiwan United Arab Emirates United States United Kingdom Other Don t know In 2013, do you think the European sovereign debt crisis will ease, worsen, or stay about the same? Ease Stay about the same Worsen No opinion What do you see as the biggest risk to your local market in 2013? Political instability Excess regulation Weak regulation Weak economic conditions Systemic disruptions European sovereign debt crisis Other (please specify): No opinion What do you see as the biggest risk to global capital markets in 2013? Political instability Excess regulation Weak regulation Weak economic conditions Systemic disruptions European sovereign debt crisis Other (please specify): No opinion

62 What do you see as having the biggest positive impact on global capital markets in 2013? Increased focus on resolving/easing the European sovereign debt crisis Increased growth rates among emerging economies Increased market transparency Increased focus on solutions to create more jobs Decreased tax rates on income and capital gain Improved regulation and enforcement Other (please specify): No opinion In 2013, do you expect employment opportunities for investment professionals in your local market to increase, decrease, or stay about the same? Increase Decrease Stay about the same Not sure If you have any additional comments about the economy or capital markets, either locally or globally, please share them with us below: Locally: Globally: Financial Market Integrity and Restoring Trust How would you rate the level of integrity of global capital markets in 2012? Poor Excellent 5

63 Do you think the integrity of global capital markets in 2013 will be better or worse than in 2012? Better About the same Worse Which factor do you think has contributed the most to the current lack of trust in the finance industry? Poor government regulation and enforcement Lack of ethical culture within financial firms Market disruptions (failed IPOs, flash crash etc.) Other (please specify): I don t think there is lack of trust in the finance industry. No opinion Which one of the following regulatory or industry actions is most needed in the coming year to help improve investor trust and market integrity? Improved enforcement of existing laws and regulations Improved regulation and oversight of global systemic risk Improved transparency of financial reporting and other corporate disclosures Improved market trading rules on transparency and frequency of trades Improved corporate governance practices Improved auditing practice and standards Which one of the following firm-level actions is most needed in the coming year to help improve investor trust and confidence? Improved compensation practices Increased adherence to ethical codes and standards Clarification of fiduciary duty responsibilities Increased staff training and education Improved culture established and encouraged by top management and executives Other (please specify): No opinion

64 Please rank the following ethical issues facing your local market in the coming year in order of the most serious (1) to the least serious (6), by clicking and dragging the issue to your preferred rank. Derivatives: disclosure and use of financial derivatives by financial firms Financial advisers: mis-selling of products Financial reporting: honesty and integrity of financial reporting generally Investment management: the quality of services and cost/compensation structure Market fraud, such as insider trading Market trading practices, such as dark pools and high-frequency trading Please rank the following ethical issues facing global markets in the coming year in order of the most serious (1) to the least serious (6), by clicking and dragging the issue to your preferred rank. Derivatives: disclosure and use of financial derivatives by financial firms Financial advisers: mis-selling of products Financial reporting: honesty and integrity of financial reporting generally Investment management: the quality of services and cost/compensation structure Market fraud, such as insider trading Market trading practices, such as dark pools and high-frequency trading If you have any additional comments about financial market integrity and restoring trust in the industry, please share them with us below:

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